Correlation Between American Express and Garovaglio
Can any of the company-specific risk be diversified away by investing in both American Express and Garovaglio at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Express and Garovaglio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express Co and Garovaglio y Zorraquin, you can compare the effects of market volatilities on American Express and Garovaglio and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Express with a short position of Garovaglio. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Garovaglio.
Diversification Opportunities for American Express and Garovaglio
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Garovaglio is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Garovaglio y Zorraquin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garovaglio y Zorraquin and American Express is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Express Co are associated (or correlated) with Garovaglio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garovaglio y Zorraquin has no effect on the direction of American Express i.e., American Express and Garovaglio go up and down completely randomly.
Pair Corralation between American Express and Garovaglio
Assuming the 90 days trading horizon American Express is expected to generate 2.17 times less return on investment than Garovaglio. But when comparing it to its historical volatility, American Express Co is 2.17 times less risky than Garovaglio. It trades about 0.29 of its potential returns per unit of risk. Garovaglio y Zorraquin is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 19,250 in Garovaglio y Zorraquin on October 20, 2024 and sell it today you would earn a total of 4,050 from holding Garovaglio y Zorraquin or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express Co vs. Garovaglio y Zorraquin
Performance |
| Timeline |
| American Express |
| Garovaglio y Zorraquin |
American Express and Garovaglio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Garovaglio
The main advantage of trading using opposite American Express and Garovaglio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Garovaglio can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Garovaglio will offset losses from the drop in Garovaglio's long position.| American Express vs. United States Steel | American Express vs. Agrometal SAI | American Express vs. Telecom Argentina | American Express vs. Compania de Transporte |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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